At 6:41pm on June 7th, 2008, DrWAVeSport said…
Subject Forced Pooling per Haynesville Shale Play
Question I have read so much per forced pooling. I Live in Shreveport, LA...Approx. 90% of recent legal notices (6/17 thru 7/8) per LA Office of Conservation where O&Gs file applications, contain clauses of "force pooling" & "integrating of all separatly owned tracts, mineral leases, and other property interests...with each tract sharing in unit production on a surface acreage basis of participation..." What exactly does this mean to (us) the landowners (who are attempting to acquire better land leasing deals)? Are they attempting to get out of lease bonus moneys? Nothing really sounds great about being force pooled. If you could give me (and my fellow Haynesville Shale stakeholders) the ups and downs per these forced pooling clauses if they are granted by the LA Commissioner of Conservation...Thanks so much for your help.
Answer Dr; I'm not sure if you're talking about the pooling clause that is commonly found in leases, or about the pooling process that occurs when companies either can't locate or can't come to an agreement with some of the mineral owners in a tract they are attempting to lease.
In the first example, don't worry about it. Most leases have pooling and unitization clauses that allow the lessee to "pool" or "unitize" several or more leases together in order to increase production from a field of oil or gas. If they were not allowed to do this, much production could remain in the ground. While there is the potential for abuse, in most cases you will never even get this clause activated as it is used mainly on fields that are nearing depletion.
This type of pooling and unitization elects one well to inject a substance into it (perhaps salt water) in order to "push" the oil or gas out the other wells that have been pooled. Each mineral owner would share in the production from ALL the wells that were unitized. While your royalty fraction will be less in such a scenario (the newly created unit includes more land than your original lease did) you will still potentially receive more money in the long run as more of the oil or gas reserves are able to be recovered.
If you are instead referring to the forced pooling process; this basically means that you will be "leased" at terms dictated by the State; based on what they think is "fair." A pooling order generally is good for only one year or less, meaning that if they don't drill within the time specified in the pooling order, the order will expire and you will be free to lease again. If you are pooled, and there is production from the well that is drilled, you will be paid based on your election of one of the several options afforded you in the pooling order. If you ignore the pooling order, a choice will be made for you by the terms of the pooling order.
Some people prefer to be pooled, rather than lease to a company they can't reach an agreement with. They feel that the State will offer better terms than the company was offering.
Hope this helps explain the pooling process.
Frederick M. Scott CMM
Answered Question...I want to thank Mr. Scott for his timely and knowledgeable information (and for putting it into an understandable format). I appreciate him answering my questions that I sent to "AllExperts.com" for his reply, last week.
Thank you again, "AllExperts.com" I have enjoyed all the Q&As that your experts put together that are helping the rest of us learn more about the O&G Industry.
DrWAVeSport 6/7/2008 p.m. Delete Comment